June 29, 1992
TO: UNIT INVESTMENT TRUST COMMITTEE NO. 33-92
RE: INSTITUTE SUBMITS COMMENTS ON NASAA MANUAL EXEMPTION
PROJECT
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As you know, since the mid-1980s, NASAA and certain of the
individual states have been reviewing the status of the manual
exemption because state administrators believe that securities
that could not otherwise qualify for registration, such as penny
stocks, are being sold without registration pursuant to the
manual exemption. In fact, repeal and/or amendment of the manual
exemption has been proposed on numerous occasions which would
preclude the use of the manual exemption by sponsors of unit
trusts for resales of units of unit trusts.
In light of the various proposed amendments recommended by
certain of the states, NASAA deemed it appropriate for the
Registration Exemption Committee to review the manual exemption
and offer various alternatives that individual states may choose
to adopt in the form of either statutory amendments and/or
changes to existing administrative procedures with respect to the
manual exemption. For the past two years, the manual exemption
project has been a relatively low priority; however, this year,
the NASAA Committee will be actively working on this project. An
open meeting of the NASAA Comittee was held on Saturday, June
27th in Dallas to discuss, among other issues, the manual
exemption.
The Institute submitted the attached comment letter
outlining the Institute’s position with respect to the manual
exemption as it relates to resales of units of unit trusts. The
Institute commented that it is appropriate to exempt resales of
units of unit trusts since the initial public offering was
originally registered in the states and it is unlikely that any
additional protection or other benefit could be obtained by
requiring registration of resales in the states. It is our
understanding, based upon the discussion at the NASAA Committee
meeting, that the NASAA Committee will recommend that the manual
exemption be available for investment companies registered under
the Investment Company Act of 1940. It is unclear how soon the
NASAA Committee’s recommendations will be finalized in that the
Committee is concerned issuers of foreign securities may be
relying upon the exemption rather than registering their
securities with the states.
The Institute will continue to monitor the NASAA
Registration Exemption Committee’s activities with respect to
this project and will keep you advised of developments.
Patricia Louie
Assistant Counsel
Attachment